7.
12 Days Enroute <ul><li>4.3 million vehicles in North America in ‘98 </li></ul><ul><li>Estimates </li></ul><ul><ul><li>2 million to western ramps </li></ul></ul><ul><ul><li>$20,000 per vehicle </li></ul></ul><ul><li>Average car spends 12 days in pipeline inventory or 12/365 = .033 </li></ul><ul><li>On average about 66,000 vehicle in pipeline </li></ul><ul><li>Value of pipeline inventory: $1.32 billion </li></ul>

9.
Inventory at the Plant <ul><li>Load driven system </li></ul><ul><ul><li>When there’s a load, send it. </li></ul></ul><ul><li>Each plant keeps inventory for each ramp </li></ul><ul><ul><li>Average number of vehicles per load lane? </li></ul></ul><ul><li>With 16 ramps </li></ul><ul><ul><li>Average number of vehicles per plant? </li></ul></ul><ul><li>We could be doing other things with that land... </li></ul>

10.
Observation <ul><li>Inventory in a load-driven distribution system depends on </li></ul><ul><ul><li>The capacity of the transportation units and </li></ul></ul><ul><ul><li>... </li></ul></ul>

18.
Time Enroute cut to 8 days <ul><li>Effect on inventory: </li></ul><ul><ul><li>12 days = $1.32 billion in inventory </li></ul></ul><ul><ul><li>8 days = $ 880 million in inventory </li></ul></ul><ul><li>Savings of $440 million can go to pay for capital and operating expenses at the mixing center. Right? </li></ul>

19.
Wrong! <ul><li>Reducing inventory by $440 million doesn’t create $440 million in new wealth, it just gives us the use of that money. </li></ul><ul><li>We don’t have to borrow $440 million. </li></ul><ul><li>Savings is the interest: $110 million per year. </li></ul>

20.
When we look at network design... <ul><li>How many mixing centers should we have? </li></ul><ul><li>Where should they be? </li></ul><ul><li>Who should use them? </li></ul>